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How to Get Energy Tax Credit for Heat Pump

  • Transcript

    LESLIE: Tom in North Carolina is getting ready for tax season. How can we help you with that?

    TOM IN NORTH CAROLINA: I’m getting ready to put a new heat pump in this week and I read a while back in the paper that they were extending the tax break for heat pumps. But I’ve also had somebody – people tell me, “No, that’s not true.” Well, this is getting – actually it’s – my unit is 12 years old. It’s just going to naturally be a whole lot more efficient. Do you have any idea if that is true about the tax break or do I file for that or …?
    TOM: Yeah, it actually is true. It’s called the Non-Business Energy Property Credit and it’s a credit that’s offered for the installation of products that are going to help you use less energy in the house. And certainly, a heat pump can do that.
    There’s a $500 lifetime cap on the credit and different improvements qualify for different types of caps. So, the energy credit is – was reinstated and it is effective for improvements, even those that were done in 2012. And it runs through the end of 2013, so I think it’s a really good time to do that.
    Now, you mentioned that you have a heat pump. Are you thinking about just replacing the one you have? Have you considered geothermal? Because if you consider a geothermal heat pump, there’s even a bigger credit on that and that’s 30 percent of the cost of the installation.
    TOM IN NORTH CAROLINA: Yeah, that’s what I read but I did not know the difference. But the guy that’s going to put it in told me that, yeah. But that thermal thing, it was very expensive compared to what – this thing’s going to cost me about four grand, both inside and outside unit.
    TOM: Yeah, the geothermal systems are more expensive but look at what they’re going to cost when you get a 30-percent tax credit on it, because it does dramatically reduce the cost.
    TOM IN NORTH CAROLINA: Thank you. I appreciate it. And I love your show; I listen to it every week.
    TOM: You’re very welcome. Thanks so much for calling us at 888-MONEY-PIT.

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